Music Industry, Tech Groups Reach Online Music Rate Deal

By Juilana Gruenwald

As sales of traditional CDs fall and the music industry continues to battle online piracy, music industry groups and providers of new digital music services said Wednesday that they have reached a "historic" deal setting rates for digital music that can be provided online in new and creative ways.

The agreement among the Recording Industry Association of America, National Music Publishers' Association and Digital Media Association will set rates for the prices that must be paid to music publishers to provide their music through emerging services such as iTunes Match cloud service. The agreement must still be approved by the Library of Congress' Copyright Royalty Board, which sets statutory license fees for online music.

The new agreement covers five new business models: paid locker services that provide subscription-based on demand streaming or downloads such as iTunes Match cloud music service; locker services that give consumers free access to a cloud service if they purchase a CD, download or some other type of music; "limited offerings" that might offer consumers specific playlists or types of music; music bundles that might include a CD with a download; and mixed service bundles such as a broadband provider that also offers some sort of music service.

"Music publishers and record companies alike are starting to see that the business of selling music is absolutely reliant on the online area," Digital Media Association Executive Director Lee Knife said in an interview.

The rates that online music service providers would pay under the deal, which would run for five years starting in 2013, would vary depending on the service that is offered, industry representatives said. The groups also announced that they would be extending until 2017 an existing agreement set to expire at the end of the year covering the prices for CDs and digital downloads offered by digital music stores and other services like iTunes.

The deal is aimed at avoiding some of the past battles over rates for music streaming services while also introducing new ways for consumers to enjoy music and possibly deter online music piracy.

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"This is a historic agreement that reflects our mission to make it easier for digital music services to launch cutting-edge business models and streamline the licensing process," Recording Industry Association of America Chairman and CEO Cary Sherman said in a statement.

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